Which do you structure around, the ten year hold or the five year deferral?

Something in the new law is bothering me as I read about how funds are being put together. The deferral piece for investments after 2026 is a rolling five year window. The elimination of tax on appreciation needs a hold of at least ten years. Those are two different time horizons attached to the same investment, and I keep seeing people talk as if they're one thing.

If you structure around the deferral, you're solving for a five year event, which means you care about what cash is available to pay a tax bill in year five and whether the property can support a distribution or a refinance by then. That's an operating and financing question.

If you structure around the ten year appreciation benefit, the five year event is a nuisance you plan liquidity for, and everything about the deal, the debt term, the partnership agreement, the exit rights, is built for a decade.

Where I see people get caught is a partnership agreement written with normal five to seven year exit expectations sitting under a hold that needs to reach ten. Somebody wants out in year six and the whole tax posture depends on nobody being able to force a sale.

So which one drives your documents? I'd argue the ten year hold does, because that's the benefit worth having, and the five year deferral is a cash management problem. But an operator with thin reserves might reasonably say the year five bill is the thing that actually kills deals, so plan for that first and let the ten years take care of itself.

Actual structuring here is a lawyer and CPA question, I'm asking which risk you treat as the primary one.